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All Joe Cassano Ever Wanted Was To Not Pay Taxes
The Feds are closing in on a criminal fraud case against Joseph Cassano, reports ABC News, which tracked down the former AIG Financial Products czar wearing blue spandex and a sheepish expression outside his home in London. And before you wonder why a Brooklyn College educated swaps dealer with a name like Joe Cassano lives in London again, the answer is probably "taxes" -- and decimating taxes, it may not shock you to know, is fast emerging as the cornerstone of the AIG business model.
An ABC News investigation found that Cassano set up some dozens of separate companies, some off-shore, to handle the transactions, effectively keeping them off the books of AIG and out of sight of regulators in the U.S. and the United Kingdom.And as breathtaking as the sum of taxpayer dollars AIG has managed to put down in its post-crisis nationalized afterlife, the zombie insurer might possibly have indirectly scammed the government out of more money back in its Triple-A days. Today the Wall Street Journal explores AIG's euphemistically-named "tax structuring" business in a story about an IRS battle with Hewlett-Packard over an offshore entity -- or what the IRS terms a "sham that lacked economic substance and a business purpose" -- that AIG set up for the company to collect $132 million in tax credits. AIG's tax business, is "even bigger than the credit-default swaps business that led to the company's meltdown," a person "familiar with the business" tells the Journal. But that might be compartmentalizing things: we are beginning to suspect the credit default swap business and the tax "structuring" business were the same thing -- not just because they served the same end."This is the other very important issue underneath the AIG scandal," said [tax law expert Jack] Blum. "All of these contracts were moved offshore for the express purpose of getting out from under regulation and tax evasion."
An attorney and tax shelter expert we spoke with today says AIG FP was one of the biggest players in the business of engineering offshore tax shelters for corporate and private clients that resembled a multibillion dollar tax evasion scheme called Son of Boss (we don't have time to figure out why) that thousands of corporations and wealthy individuals used to book phony capital gains losses and evade most or all of their income taxes in the late nineties and early 00s. The mind-numbing litany of esoteric loopholes such tax shelters employ to concoct said phony losses is something you don't want to hear about at this hour -- trust us -- but they are generally anchored by a set of exotic unregulated derivative securities whose 'notional value' can help fabricate losses that don't actually exist. Which is where Cassano came in -- only, obviously, the losses existed.
AIG, whose lawyers taxpayers are currently (perversely) paying to sue the IRS for taxes it says it paid unlawfully, was renowned for finangling the tax xode, but our source suggested Cassano went too far -- which might have been another motive for hiding AIG FP's books from the auditor. Developing...
Josh
Zachary
Will this story get buried? If not it will expose many wealthy people and corporations to a huge public backlash. Is there any idea of how many companies have used AIG/Cassano's tax shelter scam?
Great story. I'm interested how the FBI nabs a guy for violating US law in the UK.
March 30, 2009 8:02 PM | Reply | Permalink
Is there any idea of how many companies have used AIG/Cassano's tax shelter scam?
In a Dec. 2008 report to a Democratic Chairman Carl Levin in Congress (did anyone hear about this on the MSM?), the GAO reported in a 63 page document that the vast majority of the 100 largest US corporations had subsidiaries in known 'tax havens' like the Jersey Islands and the Caymans.
Citi had 427 of such subsidiaries, 90 of which wee in the Caymans, and Bank of America had 311 total, 59 in the Caymans. Joe Conason reported this recently in Salon.
The question, what does a Bank of America or Citi subsidiary in the Cayman Islands do, business wise, other than help to dodge taxes or rig the balance sheet??
March 31, 2009 12:04 AM | Reply | Permalink
Surely that is the question TM. All the corporations are the advertisers on TV networks, they are not going to want their dirty laundry aired....and the networks are already hiding all such dirty laundry...so it won't see the light of day.
I propose the last 30 years have been one long Corporate takeover of the Networks, while the news depts. were un-independentized and became tools of the corporations. THere was a manifold necessity for Corporations to own and control our networks...they could perpetuate the need for us to buy buy buy, dictate to us what was cool and what we should buy, they could dictate to us that buying and consuming was cool and should never end....and most important, they could decide what was news.
In a nutshell, they hid how they were taking over our world, hid their complicity and utter responsibility in brainwashing our populace, and they could keep us on an endless goose chase hating terrorists, gun-toting hillbillies, and hunting abducted blondes.
March 30, 2009 10:44 PM | Reply | Permalink
Interesting you should mention that; in an effort to catch up on the main themes, I've been scouting around for anything written about this mess before 2006 or so.
Just in the past few days, I've stumbled on "Wall Street Versus America: The Rampant Greed and Dishonesty That Imperil Your Investments", by Gary Weiss. And who is he? Turns out that in May 2004, he resigned after 20+ years at Business Week in order to write this particular book.
So I picked this book up wondering why in hell a Business Week writer would have to resign from his job in order to write an expose of Wall Street -- note the time: May 2004. This book was published in 2006. (So far, it is really informative.)
Also note that Nomi Prins excellent "Other People's Money" was originally published in 2004; she ties together the deregulation of energy utilities, telecomm, and banking/finance deregulation in a mind-blowing narrative. Her background? Finance, which she left in disgust in the early 2000's in order to write about how corrupt it was.
So we have two writers, at least, who felt that they had to quite their jobs in order to write about how really, really bad it was on Wall Street. Or, should I say: Wall Street-Cayman-Jerseys-Antibies...
I'm thinking there are probably some more 'EconomicCassandras' out there who have some other key pieces of the puzzle. Clearly, offshore banking lies at the heart of this disaster.
The hearings held in March 2009 by Carl Levin's Offshore Banking Subcommittee, which is a subdivision of the Senate's **Homeland Security Committee** can be located at the C-SPAN archives, and listening to that hearing is a bit like watching a thriller. Buckle in if you head on over to CSPAN to view it.
And for extra fun after that, you can head on over to CSPAN and watch a Senate subcommittee hearing from 3 June 2008 on the topic of energy market manipulation. The two topics are definitely related.
Not sure where Cassano fits in, but he's definitely near the heart of a socially, economically poisonous web spun by AIG and corrupt Congressmen like former TexasEnron Sen Phil Gramm.
March 31, 2009 9:49 AM | Reply | Permalink
Great Work! Thanks for the research, I hope everyone who hasn't got their head around this, takes a look at these finds.
I am an uneducated person. Basically flunked out after one year of college. I do not do investigation, but I keep my eyes and ears open. I know enough to not trust a thing coming from a Corporation. That means a press release. A promise. A contract, a news report. Nothing.
Armed with that knowledge alone, I then suspect these people of being capable of ANYTHING. Partly because they are not really people, they are just cogs in an INHUMAN machine called a Corporation.
But getting back to believing them capable of ANYTHING....all this was not news to me.
Not because I am smart, or adept at reading the Tea Leaves....Just because I did not believe what they say 24/7 on CBS, CNBC, ABC, FOX, MSNBC. I just knew not to believe them. Well, if what they are saying is not true, or is misdirection, what could the real truth be? Why, all this malfeasance is then laid out before you.
Are they corrupting our govt? Buying our lawmakers? Targeting our children? Selling Poison? Selling the antidote to their poison? Stealing our jobs? Stealing our money? Not paying their taxes? Corporatizing Health Care? Criminalizing Illness? Blacklisting anyone with an ailment from HealthCare? Chopping up your mortgage? Targeting young homeowner newbies and old senior citizens with rapacious loans? Predatory Lending? Malicious Credit Card schemes?
YES YES YES. The answer is all of the above, and so much more. You just need to avoid the brainwashing to KNOW this stuff. To SEE it, even without proof or nightly news accurately and truthfully covering it. You need to throw off their veneer that these are Upstanding People who would not do this, that this can't happen in America, that my 401K isn't being held by Monstrous Criminals, that the people who OWN your HealthCare aren't vicious sociopaths.
Corporations are not people. They will never behave with any amount of compassion, or tolerance, not a drop of humanity. We have created SuperBeings and they are marching across our landscape devouring us like the Martians in War of the Worlds.
There have been other models of predation in our human history. Always somehow a powerful type making gold off the mass misery. But at least we did not put a shining visage on them. Everyone knew who had the foot on their neck. We need to wake up and realize what monsters we have amongst us. They are not golden boys, all-americans, pillars of the community, magnificent bastards, and glory-laden risktakers. They are monsters, human cogs in an inhuman juggernaut.
March 31, 2009 10:13 AM | Reply | Permalink
Dick Tater... you took the words right out of my mouth. (of course, it was hanging open for about ten minutes after reading about the Cassano tax dodge)
But, we are left with the classic dilemma. If all the media is crooked... who investigates? Who gets the story out?
We're so screwed.
March 30, 2009 10:58 PM | Reply | Permalink
Please Forward to the Daily Show... you're use of 'we're so screwed' came across in my head as voiced by Jon Stewart.
Def. read the Son of Boss link - it's like the PBS program called 'Tax me if you can' - I think it was a frontline documentary.
March 30, 2009 11:37 PM | Reply | Permalink
I agree with all of you - DickTater,lovethesinner and jofga.
We are screwed. I turned on pbs the other night when I went to bed and a sociology course was on discussing the "Cathedral of the Consumer" basically how malls, Vegas and cruiseliners are our modern Cathedrals - you gotta laugh just to avoid crying.
I hope Carli Fiorina is somehow involved in the AIGFP - HP - IRS tax shelter scam case.
March 30, 2009 11:59 PM | Reply | Permalink
Gee, what's not to like about that program? Corporations can offshore our jobs and offshore their taxes too.
We seriously need to elect 30 more progressives to congress and ten more senators like Bernie Sanders and straighten this bullshit out.
March 31, 2009 12:03 AM | Reply | Permalink
Your best bet on a national strategy for that is probably ActBlue, because it focuses on Progressives, rather than any old 'Dem' who happens along.
Also, they vet and track their candidates.
If a candidate falls of the rails, they report it.
Lots of transparency with ActBlue.
March 31, 2009 9:53 AM | Reply | Permalink
Jesus fracking Ch---t. I'm getting dizzy keeping track of all this.
It seems like you can't lift a rock anymore without discovering 68$ bil in secret tranches of credit-default tax liability bonuses paid out via no-bid contracts and Ponzi schemes in explicit violation of the 4th amendment and the Geneva Conventions.
GM. AIG. Citigroup. It's making me dizzy. Can we please turn the clock back to 1948? I want to watch a Frank Capra film and have a soda.
March 31, 2009 12:07 AM | Reply | Permalink
When I think that we are paying billions upon billions of dollars to bail out a company that was in the business of defrauding the IRS, my vision blurs and my mind goes numb.
March 31, 2009 12:19 AM | Reply | Permalink
That's as offensive as their obscene bonuses.
March 31, 2009 12:48 AM | Reply | Permalink
I guess I am so jaded, I'm never surprised this stuff occurred - just surprised if anyone does anything about it.
If you remember G.W. Bush said the rich don't pay taxes and that's why the 'middle class' (his vision of them that is.... those too poor to pay for tax shelter attorneys) ought to get tax breaks. There's already data out there about how often businesses pay no corporate income taxes (repeatedly) claiming no profits were made.
March 31, 2009 1:36 AM | Reply | Permalink
Now you see why Bush wanted to 'privatize' Social Security.
So Wall Street could screw it up while making fees into the bargain.
Sociopathology mislabeled as 'politics'.
March 31, 2009 9:55 AM | Reply | Permalink
If this does not make you ill, you have an iron stomach.
The US Treasury has been thoroughly looted.
Now we go begging to China to borrow dollars.
The guys that looted the Treasury will keep the money and go unpunished.
The guys who bought and paid for our government will continue to dictate the rules.
Joe Citizen has no understanding of how he just got robbed.
March 31, 2009 2:00 AM | Reply | Permalink
Why is it so hard to understand ...
March 31, 2009 6:55 AM | Reply | Permalink
As usual I was disorganized and nearly incoherent. My writing skills are poor, and the enormity of the subject just leaves us all beggared for the right words. Me especially. Then, you try to think up the words to illuminate and penetrate our intended audience....the mass of americans who have been lied to, propagandized, brainwashed, fooled and tricked in a giant Shell Game....a Shell Game where we don't even get to use our own eyes. The Corporate Media is a stand-in for our eyes, purportedly showing us our world and the news and what is happening.
And of course, they distort and lie and hide and repackage everything we see. They spend endless hours vilifying and demonizing and marginalizing those who WOULD tell us the truth...and they spend endless hours parading liars and mouthpieces in front of us to reinforce their message.
In the runup to the election I made a short list of the most important reforms we need
Media was number one
Voting Systems was number two
Mass Media is the most powerful tool we have ever devised. Sure, the immediate punch of Media is not the same as a Nuclear Weapon, but over time the endless brainwashing, lying, misinformation, and shaping our culture's What's Hot and What's Not, has left us without a Moral Compass as a whole. We're being told what they are doing is ok, even while they are hiding everything they are really doing.
It is why I despair of a real revolt, or popular uprising. What other era, or people, have been so thoroughly deluded? Sure, you can point to some VERY DELUDED peoples thru history, but none of them had Mass Media, 24/7 for decades and decades being used to constantly press one message, while hiding the truth so completely.
Now, the revelation that everybody with enough money to hide has successfully kept it from being taxed and is actively working to offshore our jobs and their profits and not pay a penny in taxes is in No Way suprising. It is disheartening, but think of all the collusion the media has had in Not Investigating this and actively working hand in hand with these Vermin to sweep it under the rug and keep it out of sight.
The recent warnings that the downfall of newspapers will lead to even more corruption is chilling. How much worse can it get? Even with newspapers and investigative journalism, look what was going on. At least newspaper journalists were not WHOLLY corporatized and neutered and unable to expose this stuff. Now there will be virtually No watchdogs, not even weak and ineffective wathcdogs.
We are truly in the "tree falls in the forest but if no-one hears it" territory. Even if some pipsqueak of a voice does uncover malfeasance, who is going to bring it to the public's attention? What smallish voice can be heard above the cacophony of the Corporate Megaphones?
March 31, 2009 8:56 AM | Reply | Permalink
That was quite articulate.
But consider: Hank Paulson made over $200 million.
A business writer won't make 1/200th of that amount, and is vulnerable to being sued by the very rich guy(s) s/he is trying to expose.
And the biz writer has far fewer resources that Hank Paulson.
That asymmetry needs to be fixed.
March 31, 2009 10:12 AM | Reply | Permalink
Under the cover of one emergency after another, our own financial oligarchs have been engaged in nothing less than the systematic looting of the U.S. Treasury at the expense of all of us who pay taxes and of tax-paying generations to come. This criminal enterprise continues apace with assistance from the Obama Administration and a compliant Congress. Each new jaw-dropping revelation of oligarchical venality and governmental complaisance validates the points made in Simon Johnson's "The Quiet Coup" http://www.theatlantic.com/doc/200905/imf-advice.
March 31, 2009 9:01 AM | Reply | Permalink
Keep an eye on Phil Gramm's current employer UBS, in connection with tax evasion schemes.
Former Senator Gramm was behind the push in the late '90's, to 'reform' the IRS, meaning get the IRS out of the business of auditing high income individuals. UBS is under investigation for refusing to reveal the names of 50,000 individuals who UBS helped to set up offshore accounts.
BTW, that's the same UBS who is counterparty to AIG, and has received an estimated $5 Billion in bailout money directly from AIG, and another $59 Billion in capital injections via the U.S. Federal Reserve & European Central Banks.
Stop your whining!
March 31, 2009 9:34 AM | Reply | Permalink
Maybe this isn't so complicated. It sounds a lot like what Enron did, and their executives went to prison.
March 31, 2009 3:18 PM | Reply | Permalink
I read comments like this:
"Dick Tater... you took the words right out of my mouth. (of course, it was hanging open for about ten minutes after reading about the Cassano tax dodge)
But, we are left with the classic dilemma. If all the media is crooked... who investigates? Who gets the story out?
We're so screwed. "
... and the foolishness of this conceit makes me wanna holler. Just for kicks, you should be aware that the [cue insidious theme music] MSM broke this story. Jesse Drucker in the Wall Street Journal went through all the fine details, including those that the author of this otherwise fine blog post wanted not to be bothered with), writing about this outrage not once, not twice, but thrice. ABC also did a fine job following up, as did the Seattle Pilot. And the NYT's has added its work to the story.
Full disclosure: I am an MSM reporter. And I very much worry that too many out there remain in a state of denial about what's lost as, driven by a dire economy, public radio, publc tv, the networks and newspapers shrink themselves to the size of freeze-dried fruit. These institutions are far from perfect, and yet manage also to break so many of the stories that keep us an at least semi-functional democracy.
Just today the Tribune Co. pulled the only reporter/blogger/anything based in Havana out of Cuba. And on Monday, Detroit readers awoke to the auto apocalpyse without a corporeal newspaper to tell that story ...
March 31, 2009 3:44 PM | Reply | Permalink
Hi MP
Nobody is disparaging journalism....just bad journalism or lack of journalism.
AIG has been doing this for more than a decade. It is a little late now to "break" this story. And in a routine way, Corporations know when a cause is lost. One company get's thrown to the wolves while the others escape scot-free. Too much malfeasance to keep a lid on this one (AIG), but at least they can contain the damage. If the corporations had their way, Bernie Madoff would be the face of this disaster and he almost was the only one....mostly because he is not a part of the Grand Corporate Mafia....more like a lone player. Corporations cannot afford to have all their stuff exposed and the real truth to come out, and that is why they own all the megaphones and transmitters....so they can keep the tightest lid possible on all this stuff.
Again, if there was a wealth of great muckraking journalism out there, we might never have come to this pass. And nobody in the comments section here would like anything better than real journalism with real teeth.
March 31, 2009 9:18 PM | Reply | Permalink
"And before you wonder why a Brooklyn College educated swaps dealer with a name like Joe Cassano lives in London..."
Are you kidding me? You have a name like Moe Tkacik and you're casting dispersion on the name Joe Cassano and the borough of Brooklyn? Watch it buddy. Smacks of elitism and I don't expect that from TPM.
March 31, 2009 6:01 PM | Reply | Permalink